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CS reaffirmed last week that it will explain how things will continue at the end of October. But investor confidence is still lacking.
The speculation about the future of Credit Suisse has not stopped in the new week either. Because the big bank has been in a largely self-inflicted crisis for many months. So far, however, she has not been able to show how she intends to get out of this situation. This is the only thing that CS recently announced: it is currently considering selling certain parts of its business.
However, this is very vague and possible sales will not happen that quickly, Andreas Venditti points out – he is an analyst at Bank Vontobel: “It’s about negotiations with potential buyers. These processes are not completed overnight. I suspect CS management will need a few weeks to complete such negotiations.”
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Credit Suisse shares continued to plummet in the new week. She lost over 11 percent at times today. A CS share currently costs 3.93 francs. In its heyday, a CS share was worth over 80 francs.
Keystone/Michael Buholzer
That is why the CS leadership is staunchly silent and is sticking to the date of the end of October. Then she will also present the business figures for the third quarter. Incidentally, these will not change anything about the bank’s difficult situation – because the figures will once again be less than impressive, as the bank itself has already announced.
Time is of the essence for the CS
So not only is CS under enormous time pressure, it is also negotiating from a position of weakness: “Every potential buyer knows that CS is keen to sell parts. Accordingly, the offers will not be very attractive for CS,” says Venditti.
But that would be exactly the goal if CS sells certain parts of the company: take in as much fresh capital as possible. Because reorganizing the bank is expensive. Laying off employees costs a lot of money, and there may also be additional copyists.
Caught in the negative spiral
The other way to get fresh capital would be through a capital increase – that is, the bank would issue new shares. However, the lower the share price, the more shares it has to offer in order to get a reasonable amount of new capital. With this, however, the bank is upsetting its existing shareholders, who have already suffered large losses.
Vontobel analyst Venditti speaks of a negative spiral in which CS finds itself. “The lower the price, the more dilutive a capital increase will be if it comes to that. Accordingly, this drives the price even further down.”
Credit Suisse has to do its own homework. No one will take the restructuring away from her.
The question arises as to whether a white knight will suddenly appear. Because of the low share price, the stock market value of CS has also fallen sharply and is currently around ten billion francs. That’s the same as that of private bank Julius Baer – only it’s ten times smaller. Against this background, it would be comparably easy to take over the CS.
What if the fog clears?
However, Venditti considers this scenario to be rather unlikely at the moment: “Credit Suisse has to do its own homework. No one will take the restructuring away from her.” The situation may look different when the fog has lifted and it is clearer where the CS is heading.
At the same time, the many unanswered questions about the future of the venerable bank are bad for day-to-day business. Because in the banking business, one thing counts above all: trust and stability. The bank must first earn both again.